Boom and Bust

While we continue to be fixated on the AIG bonuses, which I want to again plead that while it is unconscionable those bonuses were paid, it is still a distraction from issues that really need our collective attention, there was a fascinating and demonstrative news item originally reported a week ago.  In Bozeman, Montana, a gas line exploded, destroying a number of historic buildings on the main street of town.

For those of us who get to Bozeman, this is sad news.  Those buildings were indeed lovely.  Bozeman was one of those places that was seemingly immune from the economic nightmare devastating the country.

But the blast brought attention.  And a realization that indeed, all is not well in Paradise.  The bankruptcy of The Yellowstone Club, the moratorium on Ameya Preserve, (another land based development catering to not only the extremely rich but wealthy people who consider themselves into "sustainable" living by eating only foods "designed" by Alice Waters) along with other wealthy land owners beginning to collapse is causing a ripple effect in the Bozeman/Gallatin county economy.

Why do we care?  Couple of reasons.  More than likely as Bozeman begins to feel the impacts of the depression, many other rural areas will descend quicker and longer.  To come out of a depression in a rural area takes longer.  

But even more importantly, Bozeman is really a case study (as they say in MBA schools) on boom and busts.  Without doing the research to determine when boom and bust economies started in the US, I feel safe to say we have a long history of them.  Think gold and silver mining, and logging.  In fact, early in our history, booms and busts were natural resource dependent.  Come in, strip the area of the resources, make a lot of money, and leave a ghost town.  

We have, over time, managed to level out the booms and busts until the past twenty years.  Now we have dot.com booms and busts, the real estate boom and bust and it's safe to say without changing our economic models drastically, there will be another boom and bust within the next ten years.  

So here is Bozeman, on the rural/small town edge of a showy wealth driven boom and a last gasp of egos slide bust.  Strangers came into town, convinced the locals that these swanky real estate developments would enhance the economy over time, and now hundreds of carpenters, tile layers, ski lift operators, art gallery owners, interior designers, architects, escrow officers, are all beginning to understand what a bust feels like.  They attend bankruptcy hearings where formerly wealthy people who leveraged other people's money try to hold onto control of developments that were never real in the first place.  

There is gold in them there hills!

We clearly need a new economy to make sure we are not constantly re-enacting the creation of ghost towns.  You would think we'd learned our lessons from 1849.  Guess not.